MOF Invites Feedback on Proposed Changes to the Income Tax Act

1.    The Ministry of Finance is inviting interested parties to provide feedback on the draft Income Tax (Amendment) Bill 2017 from 19 June to 10 July 2017. 

Proposed Amendments

2.    The proposed amendments to the Income Tax Act (“ITA”) include changes announced in the 2017 Budget Statement. The key changes include:

a)    Enhance and extend the Corporate Income Tax rebate (“CIT rebate”) for Year of Assessment (“YA”) 2017 and YA 2018 to help companies cope with the economic uncertainty and continue restructuring. For YA 2017, the CIT rebate cap has been raised from $20,000 to $25,000. The CIT rebate will be extended to YA 2018, but at reduced rate of 20% of tax payable, capped at $10,000;

b)    Personal Income Tax rebate for YA 2017. Every individual tax resident will receive a 20% rebate capped at $500; and

c)    Liberalise tax deduction for payments under Cost Sharing Agreements (“CSAs”) for R&D projects. The 75% safe harbor rule which was announced in Budget 2017 will be enhanced. Taxpayers will be able to claim tax deduction for the full CSA payments without having to provide a breakdown of the expenditure covered by the CSA payments.

3.    The Bill includes an amendment to strengthen the transfer pricing regime and introduce a mandatory transfer pricing documentation (“TPD”) requirement[1]. To limit compliance burden for smaller businesses, the mandatory TPD requirement will only apply to businesses with turnover exceeding $10m and significant related party transactions. The majority of companies will not be affected, as this change will only be relevant to fewer than 5% of all companies, many of which have already been maintaining TPD. 

Other Amendments

4.    The Income Tax (Amendment) Bill 2017 provides for 25 other refinements to existing tax policies and tax administration, arising from periodic review of Singapore’s income tax system, such as to:

a)    Amendments relating to third-party voluntary contributions to the Medisave accounts of private sector employees and self-employed persons (“SEPs”). With effect from 1 January 2018, the maximum amount that an employer can contribute to his employee’s Medisave account (that is not treated as income of the employee) under the Additional Medisave Contribution Scheme will be raised from $1,500 to $2,730 per year. There will be an increase in the tax deduction allowable to the employer for these contributions from $1,500 to $2,730 per year. In addition, the maximum tax exemption that an SEP can receive on contributions to his Medisave account by an eligible company he works with will be increased from $1,500 to $2,730 per year. The maximum tax deduction allowable to an eligible company for its contributions to the SEP’s Medisave account will also be increased from $1,500 to $2,730 per year. All other conditions for granting tax benefits in respect of such voluntary contributions remain unchanged; and

b)    Enable the Minister for Finance to implement Singapore’s obligations under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (known as the “Multilateral Instrument”), which Singapore has signed on 7 June 2017. 

Consultation Details

5.    The public can access the detailed consultation documents for the draft Income Tax (Amendment) Bill 2017 on the Ministry of Finance's website (www.mof.gov.sg) and the REACH consultation portal (www.reach.gov.sg). 

6.    Written comments can be submitted to:

Ministry of Finance
Tax Policy Directorate
100 High Street #10-01
The Treasury
Singapore 179464
Fax: 6337 4134
Email: pc_itabill@mof.gov.sg (preferred mode)

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Issued by Ministry of Finance 
Singapore

19 June 2017



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[1] Transfer pricing is the pricing of goods, services and intangibles between related parties. For the purpose of tax, related parties must deal with each other at arm’s length, i.e. the transfer prices between them must be equivalent to prices that unrelated parties would have charged in the same or similar circumstances. Transfer pricing documentation refers to the records kept by taxpayers to show that their related party transactions are conducted at arm’s length.

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Last Updated on September 12, 2017
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